The family of murdered charity worker Margaret Hassan have expressed their anger at a Baghdad court decision to free two of the three men charged in connection with her kidnapping and killing.

In a statement released today, the family said they were "devastated and appalled" by the court's decision to find Mustafa Salman not guilty of murder and to free Muhssin Ahmed and Qassim Muhammad.

The statement said: "Mustafa [Salman] was found guilty of 'joining the group who kidnapped Margaret'.

"This man was found with Margaret's personal belongings. He had used her mobile telephone up until the eve of her death, to make demands of her husband Tahseen.

"He admitted to the Iraqi police that he had interrogated Margaret. Why was he not found guilty of murder? He is now entitled to appeal against this sentence and may be free within months."

The family said justice had not been done and renewed attacks on the British government's handling of Mrs Hassan's kidnapping.

"The British government's handling of Margaret's kidnapping was inept. Their refusal to interview the kidnappers who were arrested by US forces on May 1 2005 leaves our family to draw one conclusion: they would have to admit to incompetence in this investigation.

"We feel that Margaret has been betrayed and that truth and justice have been denied.

"Today's judgment gives a green light to all kidnappers and murderers in Iraq to continue their terrible deeds. Both the British and Iraqi governments should hang their head in shame." The court today sentenced Salman to life in prison in connection with the 2004 abduction and killing of Mrs Hassan.

Salman had been charged with aiding and abetting the kidnappers who seized Mrs Hassan on her way to work. The two other defendants in the case, Mr Ahmed, 39, and Mr Muhammad, 33, were acquitted of helping the kidnappers.

It was revealed in court that an associate gave Salman, 30, a plastic bag and asked him to look after it. Mrs Hassan's purse and documents were found in the bag four months later when Iraqi security forces raided Salman's home.

Salman denied any links with the kidnappers. He told the judge that he took the plastic bag from the sheikh of a mosque in south-east Baghdad, but didn't open it for two months.

He said: "I opened the plastic bag to find ... the credentials of Margaret Hassan."

Salman said he returned to the sheikh, who promised to take the bag later, but then disappeared.

Mrs Hassan, who was born in Dublin but held an Iraqi passport and had lived in the country for 30 years, was abducted in October 2004 and killed less than a month later. No group claimed responsibility for the abduction or killing and her body has never been found.

American troops arrested three men in May last year and charged them in connection with the killing. Today's trial is believed to be the first for the abduction or killing of a foreign-born civilian in the Iraq conflict.

Deirdre Fitzsimons said the British government had told Mrs Hassan's husband, Tahseen, to emphasise his wife's "Iraqi-ness" when dealing with kidnappers. The strategy was "ridiculous" because her sister was carrying her British passport when she was kidnapped, Ms Fitzsimons said.

"I don't think he knew what to do. He did the best he could. After all, this was a man in a house on his own, his wife had been taken hostage, he had seen terrible videos of her. He was really left on his own with this advice," she told the BBC Radio 4 Today programme.

Ms Fitzsimons said the last piece of advice Mr Hassan received from the government was to give the kidnappers the mobile phone number of an employee of the charity Care in the Egyptian capital, Cairo.

"The next day my sister was murdered. He never even had the chance to [pass on] the phone number."

Ms Fitzsimons renewed her appeal to the government to allow British police to interview the alleged kidnappers to find out where Mrs Hassan's body was buried: "They were found with my sister's personal belongings, her handbag, her make-up - things that women carry around - the number plates of her car."

"These men know where my sister is buried. All we want to do now is to bring her home. Her husband wants her to come home to England. We want to bury her with the respect she deserves."

Ireland's foreign minister, Dermot Ahern, said that it would be "of benefit" for the UK Foreign Office to issue a public statement about the circumstances surrounding Mrs Hassan's kidnapping.

"In order to clear the air and to show how difficult it is ... I think something like that would be of benefit," he told BBC Radio 4's The World At One.

"My understanding was that people had been in contact with [Mrs Hassan's husband] but that at the time it was important to a large extent to keep as silent as possible her British involvement, to emphasise that she worked with Care International, to emphasise that she was an Iraqi citizen and worked for the betterment of Iraqi people and also that she was an Irish citizen and born in Ireland.

"I can understand the strong feelings of Margaret Hassan's family, because they have articulated them to us as well.

"To a large extent, we were helpless because all we could provide were assurances that this lady was indeed Irish. We have no people on the ground."

Asked if British authorities could have done more, Mr Ahern said: "It is not for me to criticise. In all the incidents that have taken place, we have got full cooperation, but what happens on the ground is another issue and not something I have personal knowledge of."

Mrs Hassan's family released a statement yesterday, accusing the British government of effectively sentencing her to death by refusing to speak to her kidnappers.

They said British officials told Mr Hassan they would not speak to the hostage takers.

"We believe that the refusal by the British government to open a dialogue with the kidnappers cost our sister her life," said the statement, released yesterday by Deidre, Geraldine, Kathryn and Michael Fitzsimons. "Margaret, who was vocally opposed to the war in Iraq, was sacrificed for the political ends of Tony Blair and George Bush."

The Foreign Office confirmed Mrs Hassan's husband had been called from her phone by someone claiming to be behind her abduction, but said it had been unable to confirm the claims. It said that, during the kidnap, "our strategy was one of 'personalisation and localisation', minimising the links between Mrs Hassan and the UK".

It added: "We understand her family having criticisms of the government approach and we remain in regular contact with them."

One of the recordings, which showed Mrs Hassan in tears begging for British troops to be withdrawn from Iraq, was screened on al-Jazeera, the Arabic TV channel. At the time, Mr Straw described the broadcast as "extremely distressing" and said: "We hope all Iraqis will join us in calling for her immediate release."

The Foreign Office said it would follow the trial of the three men very closely.

Since the start of the US-led invasion of Iraq in 2003, more than 200 foreigners and thousands of Iraqis have been kidnapped. More than 40 have been killed.